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The Big Tax Increase Nobody Noticed Print
Written by Dean Baker and Nicole Woo   
Wednesday, 01 October 2014 08:35

The 2011-12 Social Security payroll tax holiday ended in January 2013, which meant that the vast majority of working Americans faced a two percent cut in their take-home pay. 

Compared to past payroll tax increases, this was an extraordinarily large and sudden one. For example, from 1980 to 1990 the rate was increased gradually by a total of 2.24 percentage points; in no year did the rate rise by more than 0.72 percentage points, or just over one-third of the 2013 increase. (This combines the employer and employee side tax increases. In 2013, the whole tax increase was on the employee side.)

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Today, Health Insurance Fuels Entrepreneurship Print
Written by Janine Duffy   
Monday, 29 September 2014 13:43
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Labor Market Policy Research Reports, September 19 – September 25 Print
Written by Janine Duffy   
Thursday, 25 September 2014 14:04

The following reports on labor market policy were recently released:

Center for American Progress

Innovations in Apprenticeship
Sarah Ayres Steinberg and Ethan Gurwitz

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Labor Market Policy Research Reports, September 12 – September 18 Print
Written by Janine Duffy   
Monday, 22 September 2014 13:31

The following reports on labor market policy were recently released:

 

Center for American Progress

5 Policies for Improving Data Use to Accelerate Veteran Employment
Aneesh Chopra and Ethan Gurwitz

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Health Insurance: Healthy for Entrepreneurship? Print
Written by Janine Duffy   
Thursday, 18 September 2014 09:16

A new paper by Gareth Olds finds that the availability of publicly funded insurance may have boosted entrepreneurship by allowing parents to start their own businesses while maintaining health insurance coverage for their children. The Children’s Health Insurance Program (CHIP) provides health insurance to children in families with incomes too high for Medicaid but below a higher cutoff that varies by state.

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Today, ACA Boosts Voluntary Part-Time Employment Print
Written by Dean Baker   
Tuesday, 16 September 2014 10:49

 

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Labor Market Policy Research Reports, August 22 - September 11 Print
Written by Janine Duffy   
Thursday, 11 September 2014 14:13

Labor Market Policy Research Reports, August 22 – September 11

The following reports on labor market policy were recently released:

Center for American Progress

Administrative Action on Immigration Reform: The Fiscal Benefits of Temporary Work Permits
Patrick Oakford


Center on Budget and Policy Priorities

House Bill Would Raise Small Business Premiums and Undercut Health Reform’s Consumer Protections
Edwin Park

State Earned Income Tax Credits and Minimum Wages Work Best Together
Erica Williams and Chris Mai

 

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Wage Inequality: A Story of Policy Choices Print
Written by John Schmitt   
Thursday, 11 September 2014 10:09

The September 2014 issue of New Labor Forum includes an article(paywalled) by Larry Mishel (President of the Economic Policy Institute), Heidi Shierholz (until recently an economist at EPI, now Chief Economist at the Department of Labor), and me offering our explanation for the rise in wage inequality since the end of the 1970s.

From the introduction:

The mainstream of the economics profession offers one over-riding explanation for the rise in inequality: workers who have the skills needed for new technologies have done well, while those lacking those skills have fallen farther and farther behind. …We take a different view. We believe that it is possible to explain the entire rise of economic inequality since the late 1970s as the outcome of an array of economic policies that had the easy-to-predict effect of widening the gap between the top 1 percent and the rest.

Over each of the last three decades, macroeconomic policy (fiscal, exchange rate, monetary policies), trade agreements, deregulation of the financial sector, the legal environment governing unionization, the minimum wage, industry deregulation (in airlines, trucking, inter-state busing, and elsewhere), the privatization of state and local government functions, and other policies have had different effects on different kinds of workers, helping some and hurting others. … Together, we argue, these policies can explain changes in wage trends for workers—both men and women—across the wage distribution.

 

This post originally appeared on John Schmitt's blog, No Apparent Motive. September 11, 2014

 
DATA FLASH: Job Growth Slows Further in August Print
Written by Dean Baker   
Friday, 05 September 2014 07:39

The pace of job growth slowed sharply to 142,000 in August. Coupled with downward revisions to June's data, this brings the average rate of job growth over the last three months to 207,000. The sharp dropoff was due in part to flat employment in manufacturing after two months of healthy growth and a drop in employment of 8,400 in retail. Wage growth was little changed. Over the last three months, the average hourly wage has risen at a 2.3 percent annual rate, virtually identical to the 2.1 percent rate over the last year.

On the household side there was little change. The unemployment rate edged down slightly to 6.1 percent, but the employment-to-population ratio (EPOP) remained stable at 59.0 percent. By education level, college grads don't seem to be faring well at this point in the recovery. Their unemployment edged up to 3.2 percent, while their EPOP fell 0.2 percentage points to 72.2 percent. Over the the last year, their unemployment rate has fallen by just 0.3 percentage points, while the EPOP of college grads is actually down by 0.6 percentage points. By comparison, those with some college have seen a drop of 0.7 percentage points in their unemployment rate and a rise of 0.4 percentage points in their EPOP.

 
Patently Absurd: the Ice Bucket Challenge in Another Context Print
Written by Ben Wolcott   
Thursday, 28 August 2014 13:33

Social media and the commentariat are abuzz with updates and analysis on the Ice Bucket Challenge, an internet phenomenon where people do some combination of dumping cold water on themselves and donating money, raising over $90 million for the ALS Foundation so far.  While the ice bucket challenge has drawn support and criticism from various corners, it’s worth pointing out that foundations like the ALS Foundation, which fights “Lou Gehrig’s Disease on every front,” exist in their current imperfect form because of the structure of patent law.

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Part 2: Returns to Whose College Degree? Print
Written by Ben Wolcott   
Wednesday, 27 August 2014 14:05

In a recent post, I argued that Avery and Turner’s research, cited by The New York Times' David Leonhardt, ignores the experiences of students of color. For a variety of reasons, such as labor market discrimination, workers’ outcomes diverge significantly based on race. Research from CEPR, for example, showed that in 2013, recent black college graduates had more than double the unemployment rate (12.4 percent) of recent college graduates in general (5.6 percent), and more than half (55.9 percent) worked in jobs that do not require a college degree. Against this background, simply looking at the average return to college does not cut it; the payoffs are smaller and less certain for some groups of students than the overall average suggests.

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Part 1: Returns to Whose College Degree? Print
Written by Ben Wolcott   
Monday, 25 August 2014 09:49

As college students head back to school and costs rise faster than inflation even using a conservative measure, it’s worth revisiting the dispute about the value of a degree. In May, David Leonhardt declared the debate closed, citing a paper by David Autor and explaining that the total cost of college is about negative $500,000 over the course of someone’s lifetime. (As Leonhardt notes, the original source for this estimate is a 2012 journal article by Avery and Turner.) To calculate the return to college, researchers basically subtract the costs of tuition and forgone wages from the average additional lifetime earnings associated with a college degree.

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Labor Market Policy Research Reports, August 15 - August 21 Print
Written by Ben Wolcott   
Friday, 22 August 2014 13:52

The following reports on labor market policy were recently released:

Institute for Women’s Policy Research

Women in Construction and the Economic Recovery: Results from the 2013 IWPR Tradeswomen Survey
Ariane Hegewisch and Brigid O’Farrell

Economic Policy Institute

Lagging Demand, Not Unemployability, Is Why Long-Term Unemployment Remains So High
Josh Bivens and Heidi Shierholz

Low Wages and Few Benefits Mean Many Restaurant Workers Can’t Make Ends Meet
Heidi Shierholz

 
Farmer’s Folly: The Sequel Print
Written by David Rosnick   
Wednesday, 20 August 2014 14:16

In a new working paper, UCLA’s Roger Farmer responds to last year’s investigation into his claim that declines in the stock market caused the Great Recession. Farmer apparently failed to grasp the nature of the critique.

In his original paper, Farmer claimed to have found a stable relationship between the movements in S&P 500 and unemployment rates, and that the data “leads me to stress asset market intervention as a potential policy resolution to the problem of high and persistent unemployment.”  In other words, the government should deliberately prop up the stock market as a way of boosting the economy. Farmer appealed to the apparent forecasting power of his model to support his policy preference.

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Labor Market Policy Research Reports, August 1 - August 14 Print
Written by Ben Wolcott   
Friday, 15 August 2014 14:45

Labor Market Policy Research Reports, August 1  – August 14

The following reports on labor market policy were recently released:

Economic Policy Institute

Wage Inequality: A Story of Policy Choices
Heidi Shierholz, Lawrence Mishel, and John Schmitt

Facts About immigration and the U.S. Economy: Answers to Frequently Asked Questions
Daniel Costa, David Cooper, and Heidi Shierholz

 
Correction and Update on Bain and Blackstone’s Recent IPO for Michael’s Stores Print
Written by Eileen Appelbaum   
Thursday, 14 August 2014 13:04

Michael’s Stores was taken private in a leveraged buyout on October 31, 2006. At the time of LBO, Highfields Capital Partners, which owned shares in the specialty retailer, was allowed to retain its interest – worth about $200 million. Funds of two private equity firms, Bain and Blackstone, purchased the remaining shares for $5.8 billion (PitchBook Michael’s Stores company profile 7-1-14 behind a paywall). Michael’s Stores had very little long-term debt at the time it was acquired. The specialty retail chain had an enterprise value (EV) of $6.025 billion. Michael’s Stores had 2005 earnings (EBITDA) of about $550 million. The multiple at which it was acquired (EV/EBITDA) was 11.

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How Old Will Social Security Be When the Rich Pay the Same Rate as the Rest of Us? Print
Written by Nicole Woo   
Thursday, 14 August 2014 12:35

Today is Social Security's 79th birthday, a good time to celebrate the nation's most effective anti-poverty program, which, especially after the housing crash and Great Recession, is crucial to the retirement security of middle- and working-class Americans.

But in about 20 years, Social Security will likely be able to pay only about 3/4 of promised benefits to retirees (if nothing's done to change the program). One way to make sure that this drop doesn't happen is to have our nation's wealthiest folks pay the same Social Security payroll tax rate as the rest of us.

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What's 35 Grand to Marco Rubio? Apparently Not Much Print
Written by Alan Barber   
Thursday, 07 August 2014 00:00

Writing in the National Review recently, Sen. Marco Rubio of Florida claims that Social Security will be insolvent by the time he retires. He goes on to make a few suggestions to fix the program. Each of these ‘fixes’ is problematic. The flaws with the Rubio fixes have been and will be repeated many times (for example, raising the retirement age can be problematic for workers in physically demanding jobs). But before getting to the fixes, there should be a full stop after the paragraph:

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Update on the Thirteen States that Raised their Minimum Wage Print
Written by Ben Wolcott   
Wednesday, 06 August 2014 09:55

In a series of recent blogposts, we updated a methodology used by Goldman Sachs to evaluate the impact of minimum-wage increases in 13 states at the beginning of this year. A number of publications, including USA Today and The New York Times, cited these blog posts in pieces on the minimum wage.

As we noted at the time, the Goldman Sachs’ methodology is not ideal for a number of reasons. Now, economists Saul Hoffman and Wai-Kit (Ricky) Shum from the University of Delaware have done a more formal analysis of these 13 states and found qualitatively similar results to the pieces using the Goldman Sachs method. Specifically, all of the analyses have found no evidence of negative employment impacts. If anything, the results have indicated that minimum wage increases are associated with more rapid employment growth, although this relationship is not statistically significant.

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CEPR News July 2014 Print
Written by Dawn Lobell   
Friday, 01 August 2014 14:57

The following newsletter highlights CEPR's latest research, publications, events and much more.

CEPR on the Minimum Wage
To mark the fifth anniversary of the last increase in the minimum wage, CEPR released its Minimum-Wage Pay-Cut Clock that demonstrates how much, down to the second, minimum wage workers continue to lose as long as the wage remains frozen at its current level. CEPR’s Pay Cut Clock was featured in a press conference held by U.S. Senator Tom Harkin (D-IA), U.S. Representative George Miller (D-CA), and U.S. Senator Al Franken (D-MN) commemorating the anniversary.

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